For Last-Minute Filers, a Little Extra Time to Get It Together

Second, make sure you check the correct filing status. The rules are different this year for heads of households. If you have filed as a head of household in the past, and you have adult children, you may have to file as a single taxpayer for 2005. Indeed, the Joint Tax Committee of Congress recently found that 250,000 taxpayers will lose their head-of-household status for 2005. This will generally result in higher taxes, the committee noted. For example, an individual with taxable income of $20,000 would have to pay $1,409 filing as single versus $953 as a head of household.

Third, be sure the figures you put on the return match those on third-party documents, such as the W-2 form you get from your employer or the 1099 you get from your bank for interest you earned. These figures, along with such things as mortgage interest you paid (Form 1098), are reported to the IRS, and its computers are supposed to match them up. The system isn't perfect, but a mismatch invites IRS questions.

Note that there are ordinary dividends and qualified dividends. Tax rates are lower for the latter, on the theory that the firm paying them to you has already paid tax on the income that produced them. If you got dividend income, you should have gotten a Form 1099 from the company or your brokerage or mutual fund, and it will show ordinary dividends and qualified dividends.

Fourth, if you don't have many deductions -- if you're single and don't own your home, for example -- you likely would be better off taking the standard deduction. If you have lots of deductions, then you want to itemize. If you're in between, it's worth trying both ways to see which is better. The IRS provides some rough estimates of the combinations of income and deductions that would make itemizing worthwhile, but they're more of a guide to start figuring than an answer to the question. It's all a pain, and one of the areas where computer software can be very helpful, but worth the effort.

Also, be sure to review the items in the "Adjusted Gross Income" section of the 1040. Included here are a number of deductions you can take without itemizing. These include breaks for various education breaks, including one for teachers, moving expenses, individual retirement account deductions and others.

After all this, if you can't quite get it done, file for an extension. Such extensions are granted automatically and, in a break from the past, are for six months. Until now, you got only four months and then had to apply again for two more. The form is 4868 "Automatic Extension of Time to File," and it's available on the IRS Web site, http://www.irs.gov/ . You can file electronically or by mail.

But note: An extension applies only to the filing of your return, not to your obligation to pay. This means you need to do enough of your return to be sure you don't owe anything beyond what has been withheld plus any estimated payments you have made. If you owe, you should pay the balance due when you apply for the extension. You can pay by check, credit card or direct debit from your bank account.

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Assets in 529 college savings pla ns topped $68 billion at the end of last year, according to data released recently by the College Savings Foundation. That total was up 7.9 percent from an estimated $63.4 billion at the end of September, and up 30.8 percent from the $52.3 billion reported at the end of 2004. Families fund these plans with after-tax money, but earnings are tax-free if used for higher education expenses.

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A federal court in California has granted the IRS a "John Doe summons" for the payment records of PayPal Inc., the company that allows individuals to send and receive money online. The summons is part of the agency's continuing effort to track down tax evaders who park assets offshore and then use various payment systems, including credit and debit cards and possibly PayPal, for access to their money. The IRS is not accusing PayPal of anything but wants the records to track funds to their source.